Gift and Souvenir Stores NAICS 459420

Jul 7, 2025 - Retail Sales Reflect Cautious Spending Environment

• Retail sales rose 1% in May 2025 year over year, while unit demand declined 1%, reflecting consumer uncertainty, according to recently released Circana data. Retail food and beverage spending increased 3% in May, even as unit sales were flat, causing pressure on consumers to cut back on their non-food discretionary purchases. According to Marshal Cohen, Circana’s chief retail industry advisor, “Consumers are prioritizing their spending to a degree not seen since the pandemic, and consumer sensitivity to price and priority will only elevate as market pressures evolve.” In May, discretionary general merchandise retail sales fell 3%, and unit demand was 4% lower than a year ago. The report also noted that consumers who have children are continuing to spend more on discretionary items, even as they incur higher costs on food. Even so, spending growth among households with children is likely to diminish as cost pressures mount.
• Sales for the US gift and souvenir stores industry are projected to grow at a CAGR of 1.99% between 2025 and 2029, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is slower than the overall economy‘s anticipated growth. The retail and wholesale sectors are driven by consumer spending, along with expenditure by businesses and government. A factor that may limit consumer spending is higher tariffs on consumer goods. On a positive note, lower inflation supports a moderate increase of real disposable income by about 2% in 2025 and 1.9% in 2026. Real income could suffer to an extent if average prices rise due to tariff implementation. The forecast said retail spending could soften with the growth of spending on consumer services such as travel and live entertainment. An increase in tourism can help boost traffic at gift and souvenir stores.

• The Retail Trade Industry is one of 10 industries reporting growth in June’s Services ISM Report on Business. Executives in the Retail Trade industry reported an increase in business activity, prices paid for materials and services, and inventories along with slower supply deliveries, a decrease in order backlogs, and lower employment in June. Additional industries reporting growth during the period were Other Services; Transportation & Warehousing; Utilities; Arts, Entertainment & Recreation; Management of Companies & Support Services; Wholesale Trade; Public Administration; Information; and Real Estate, Rental & Leasing. Six industries reporting contraction during the period were Agriculture, Forestry, Fishing & Hunting; Construction; Mining; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Educational Services. Overall, economic activity in the services sector grew in June after a contraction in May, with the Services PMI registering 50.8%.
• Gift and souvenir stores, which rely heavily on goods imported from China, are preparing for the wide-ranging impacts of new Trump Administration trade policies. Anticipating the growing tariffs, US retailers began stockpiling goods before the costs went up, according to a Global Port Tracker report in Gifts & Decorative Accessories. According to Jonathan Gold, VP of Supply Chain and Customs Policy at the National Retail Federation, “Retailers have engaged in mitigation strategies to minimize the potential impact of tariffs, including frontloading of some products, but that can lead to increased challenges because of added warehousing and related costs.” Retailers also continue to diversify their supply chains to bypass tariff countries. “Unfortunately, it takes significant time to move supply chains,” Gold noted.